Faced with rapid penetration of Over-The-Top (OTT) services in Asia, operators are testing numerous strategies to defend their market share, including new OTT-like services and packaged offers – and even partnerships with OTT players.
OTT players use operators’ wireline or wireless network infrastructures to carry free or paid services separate from the operator’s Internet access offers. These popular services, such as Viber, WeChat, WhatsApp and Snapchat, are often bandwidth-greedy.
A rich choice of OTT services
In Asia, OTT-mode Internet services are progressing fast, driven notably by rapid smartphone penetration. Internet access providers’ subscribers (mostly prepaid) have been quick to adopt these free communication apps which reduce the consumption of their talktime and SMS allowance.
Some OTTs are strictly local, such as Zalo in Vietnam and Hike Messenger in India now with 30 million and 70 million users respectively.
Unlike their western counterparts (WhatsApp, Viber, etc.), Asian OTTs like LINE, Kakaotalk and WeChat do not limit themselves to a single service. To impose their brand, they develop one-stop platforms with a complete range of integrated services, including: social networks, games, video chat, cloud storage and even web-based taxi services resembling Uber! If they succeed, they then monetize their user base through advertising, sticker sales, games and new services.
Operators facing multiple challenges
OTT communication services poach operators’ voice and SMS revenues. To make things worse, the enormous traffic they generate is a heavy burden for operator’s 3G networks, especially in Southeast Asia where prepay customers are constantly seeking the most attractive data offers. More than ever before, operators must focus on their fundamentals, in particular data pricing and quality of service. The success of VoLTE (voice over LTE, a 4G technology) is a vital challenge for them, for LTE’s excellent performance in terms of voice quality and latency can deliver a customer experience unrivaled by OTT voice services.
From confrontation to partnership: which defensive strategy is best?
The initial reaction of operators to this new challenge was a declaration of war. They attempted to limit access to their networks or to make leading OTTs pay for it, as in Singapore where they received a sharp warning from the local regulator IDA.
Next they decided it was wiser to make partnerships with leading OTTs in order to jointly develop offers that are now widely used. Singapore operator StarHub offers its prepay customers unlimited access to its LINE calling and messaging app, with prepaid daily or monthly “LINE Data Plans”. Indonesia’s Telkomsel created “Social Max Data Plans” allowing unlimited use of five apps: LINE, WhatsApp, Path, BBM and Waze.
These partnerships also concern international voice services, another area of rivalry between operators and OTTs in countries with a large diaspora community. In the Philippines, Globe Telecom made a partnership with Libon, the application developed by Orange Vallée, to propose a “Philippines Pack” with attractive calls charges from abroad to the Philippines. China Telecom, going it alone, has launched an in-house VoIP application “Jego” which allows customers outside China to receive calls on China Telecom landline and mobile numbers for free.
Operators are also taking initiatives on content and media. For example, Singtel has launched its own multi-screen video platform in association with Sony Pictures Television and Warner Bros. Its “HOOQ” subscription VOD OTT service is deployed across the operator’s entire footprint (Globe in the Philippines, AIS in Thailand, Airtel in India).
